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Business groups typically spend the first half of the year in Albany fending off tax increases, state borrowing schemes and expanded regulation. This year they expect to be on offense, driving their bills toward the goal line without much fear of being scored upon.

But the fate of business-backed bills to cap property taxes, reform workers' compensation and permanently extend a subsidized-power program hinges on the outcome of the business community's top priority: Gov. Andrew Cuomo's budget.

Business' agenda begins with the budget because of its game-changing premise of lower spending and no borrowing or tax hikes. Passage would enhance the governor's clout and bode well for passage of pro-business bills he supports. By the same token, if the budget is substantially changed or delayed, the rest of the wish list would be jeopardized.

“Cuomo knows if he loses this first test, he's diminished his future significantly,” said Jeffrey Stonecash, who teaches political science at Syracuse University. “He's got to hold out or he'll lose his credibility—and then lots of things don't happen.”

Among them is a measure that business groups consider imperative: It would cap annual property tax growth at 2% or the rate of inflation, whichever is lower.

Another priority: a state spending cap, to limit the growth of future budgets. Mr. Cuomo put one in his campaign blueprint, but is now focused on his budget. He has proposed budget bills to change the formulas that annually threaten to cause huge deficits, and is seeking a cap on Medicaid spending growth.

Business groups also want reform of property assessments. Optimism abounds.

“Things are looking a lot different for the business community this year, as opposed to last year,” said Mike Elmendorf, the state director of the National Federation of Independent Business. “There's hope of an affirmative agenda.”

Signs of trouble

What could go wrong? One Albany insider said administration officials are nervous about discontent in the Assembly over the perception that millionaires are getting a tax break while everyone else endures service cuts. Also, while the Republicans who control the Senate share the governor's fiscal and legislative agenda, signs have emerged that Senate Majority Leader Dean Skelos is unhappy with Mr. Cuomo and has been talking with Assembly Speaker Sheldon Silver, a reputed nemesis to business.

Mr. Cuomo's popular support remains high, but none of his plans has come to fruition. “Not a single bill has passed, he's behind on his appointments, and things feel a little adrift up here,” the insider said. It appears that Mr. Cuomo will not get his property tax cap and ethics reform until after the budget. Eliot Spitzer, in contrast, signed bills on budget reform, ethics, crime and workers' compensation in the opening months of his governorship.

Business leaders don't seem worried about measures they've devoted much energy to blocking in the past, including new taxes, wage increases, paid leave for workers, health insurance mandates and the right for private parties to sue under the Martin Act. The new Republican Senate majority opposes those measures, and the governor either rejects or omits them in his published agenda.

“Given the changes in the Senate and having a governor who is not only saying but doing all the right things, some of the bad stuff is less likely to move,” Mr. Elmendorf said. “The Assembly understands it's not going anywhere.”

Health insurance mandates with an emotional dynamic do sometimes sail through the Legislature, as an autism therapy measure did last year (although Gov. David Paterson vetoed it). And a few dozen of the 99 Democrats in the 150-member Assembly want to extend the personal income tax surcharge—which hits individuals making $200,000 or more—beyond 2011. But they express little hope of persuading the Senate and Mr. Cuomo. “The reality is, the votes aren't there,” said state Sen. Toby Ann Stavisky, D-Queens.

Plenty of drama to play out

With the exception of the Working Families Party, which agreed to support the governor's agenda in exchange for his accepting its ballot line, left-leaning advocacy groups are dutifully rallying to extend the tax surcharge and restore education aid and social services.

“We should not underestimate stories of teachers being cut and class size increasing,” warned Mr. Stonecash.

But with federal stimulus funds drying up, state revenues down from their highs, and little popular support for tax hikes, advocates' expectations are low.

“There is a much greater fundamental understanding that they're not going to get huge tax increases to increase spending,” said Brian Kolb, who leads the Assembly's 51-member Republican conference. “I'd expect them to keep fighting, to say, "Can you modify this; can you change this a little bit?' But they know there's no pot of gold.”

The property tax cap, meanwhile, has passed the Senate, and Mr. Silver has said his chamber will approve some version of it. “It's a fundamental reform,” said Kenneth Pokalsky, director of government affairs for the Business Council of New York State. “This would provide some degree of cost protection to the business community. Property taxes, for most businesses, are the biggest bill they pay in New York state.”

Power for Jobs, which provides low-cost electricity to select businesses, depends on annual extensions by the Legislature, limiting its effectiveness as an economic development tool. A plan to reform it and make it permanent was introduced as a program bill last year by the beleaguered Mr. Paterson and died in the Assembly. This year, Mr. Cuomo put a similar bill into his budget package, signaling that it's a priority.

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